The up to $8,000 tax credit for new home buyers?

Question

I can't possibly buy a house this year because my credit is not good enough but I would like to know is the tax credit good for another year or do you have to purchase a home this year to be eligible? I would love to buy a home and get an extra $8,000 for doing so! (wink)

Answer 1

Here are the facts about the existing credit which requires the purchase to be closed by November 30, 2009:

Who is Eligible
• The $8,000 tax credit is available for first-time home buyers only.
• The law defines “first-time home buyer” as a buyer who has not owned a principal residence during the three-year period prior to the purchase (note - if married, this would apply to either spouse).
• All U.S. citizens who file taxes are eligible to participate in the program.
Payback Provisions
• The tax credit is a true credit. It does not have to be repaid.
• The only repayment requirement is if the home owner sold the home within three years after the purchase.
Income Limits
• Home buyers who file as single or head-of-household taxpayers can claim the full $8,000 credit if their modified adjusted gross income (MAGI) is less than $75,000.
• For married couples filing a joint return, the income limit doubles to $150,000.
• Single or head-of-household taxpayers who earn between $75,000 and $95,000 are eligible to receive a partial first-time home buyer tax credit.
• Married couples who earn between $150,000 and $170,000 are eligible to receive a partial first-time home buyer tax credit.
• The credit is not available for single taxpayers whose MAGI is greater than $95,000 and married couples with a MAGI that exceeds $170,000.
Effective Dates for the Tax Credit
• First-time home buyers would receive an $8,000 tax credit for the purchase of any home on or after January 1, 2009 and before December 1, 2009. To qualify, you must actually close on the sale of the home during this period.
Tax Credit is Refundable
• A refundable credit means that if you pay less than $8,000 in federal income taxes, then the government will write you a check for the difference.
• For example, if you owe $5,000 in federal income taxes, you would pay nothing to the IRS and receive a $3,000 payment from the government.
• If you are due to receive a $1,000 tax refund from the government, your refund would grow to $9,000 ($1,000 plus $8,000 from the home buyer tax credit).
• Buyers can take the tax credit on their 2008 or 2009 income tax return.
Types of Homes that Qualify for the Tax Credit
• All homes, whether single-family, townhomes or condominium apartments will qualify, provided that the home will be used as a principal residence and the buyer has not owned a principal residence in the prior three years. This also includes newly-constructed homes.
For more details on the tax credit, go to www.federalhousingtaxcredit.com

There is absolutely no guarantee that the current credit will be extended or that it will be increased although both the National Association of Realtors and the National Association of Homebuilders are lobbying strongly.  But I think it would be risky to wait to act solely in the hope that a new, larger credit will be passed in the future.

Answer 2

For now this credit expires 12/1/2009.  There is a bill being considered to raise it to $15,000 and extend it another year, but who knows where that will go.  Just get your credit in better shape and see what happens.

Answer 3

At this time, the credit only will apply if you close escrow by December 1, 2009.

No word on if they will extend it.

Answer 4

I hope not, because that means I have to pay for it. (wink)